Bill Text: PA HB1155 | 2009-2010 | Regular Session | Introduced

---

Bill Title: Providing for duties of oil and gas well operators, for notice of operations and surface use and compensation agreement, for entry without surface use and compensation agreement, for restriction on issuance of permits for wells, for attorney fees and costs and for emergency situations.

Spectrum: Partisan Bill (Democrat 20-1)

Status: (Introduced - Dead) 2009-09-11 - Re-committed to APPROPRIATIONS [HB1155 Detail]

Download: Pennsylvania-2009-HB1155-Introduced.html

---

PRINTER'S NO. 1369
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1155 Session of2009
INTRODUCED BY GEORGE, BELFANTI, BOBACK, CARROLL, CONKLIN, GOODMAN, HORNAMAN, GIBBONS, HALUSKA, JOSEPHS, KORTZ, MUNDY, MURPHY, MYERS, PETRARCA, SIPTROTH, WANSACZ, SOLOBAY, THOMAS, WALKO AND WHEATLEY, MARCH 31, 2009
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, MARCH 31, 2009
AN ACT
Providing for duties of oil and gas well operators, for notice
of operations and surface use and compensation agreement, for
entry without surface use compensation agreement, for
restriction on issuance of permits for wells, for attorney
fees and costs and for emergency situations.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Surface
Owners' Protection Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of Environmental Protection of
the Commonwealth.
"Gas." Fluid, either combustible or noncombustible, which is
produced in a natural state from the earth and which maintains a
gaseous or rarified state at a standard temperature of 60
degrees Fahrenheit and a pressure of 14.7 PSIA, manufactured
gas, byproduct gas or any mixture of gases.
"Oil" or "petroleum." Hydrocarbons in liquid form at a
standard temperature of 60 degrees Fahrenheit and a pressure of
14.7 PSIA.
"Oil or gas operations" or "operations." Activities
affecting land or water sources, no matter how slight, that are
associated with oil or gas exploration or production, including,
but not limited to:
(1) Construction, installation, maintenance or removal
of oil or gas wells.
(2) Construction, installation, maintenance or removal
of pipelines and equipment for gas, oil or water.
(3) Installation, maintenance and removal of all access
or service roads.
(4) Installation, maintenance or removal of oil or gas
production or storage equipment and facilities.
(5) Rework of oil and gas wells.
(6) Plugging of oil or gas wells.
(7) Actions taken to reclaim well sites.
(8) Actions taken regarding road and pipeline rights-of-
way.
"Person." Any natural person, association, partnership,
corporation, political subdivision or agency of the Federal or
State Government or other legal entity.
"Reclaim." To restore any portion of land affected by oil or
gas operations to the same or substantially similar condition
that existed prior to oil or gas operations, or as otherwise
agreed to in a memorialized agreement between the operator and
20090HB1155PN1369 - 2 -
the landowner or tenants.
"Surface." The uppermost portion of the earth's crust,
including land and aquatic features.
"Surface owner." A person who holds legal or equitable title
to the surface of a parcel of real property.
"Surface use and compensation agreement." An agreement
written, signed and notarized between a surface owner and an
operator stipulating the location of proposed oil or gas wells,
access roads and any other uses of the surface during oil or gas
exploration and production. An oil or gas operation lease
agreement entered into by a surface owner and an operator, which
pays the surface owner at least a one-eighth royalty on gas or
oil extracted from areas under the surface of the surface
owner's real property, shall be deemed a surface use and
compensation agreement for the purposes of this act.
"Tenant." A person who occupies a parcel of real property
belonging to the surface owner in subordination to the surface
owner's title and with the surface owner's assent, expressed or
implied.
"Water sources." Rivers, streams, creeks, rivulets,
impoundments, ditches, water courses, storm sewers, lakes,
dammed water, ponds, springs or all other bodies of surface
water, or parts thereof, whether natural or artificial, within
or on the boundaries of the surface owner.
"Well." A borehole drilled or being drilled for the purpose
of or to be used for producing, extracting or injecting any gas,
petroleum or other liquid related to oil or gas production or
storage, including brine disposal, but excluding boreholes
drilled to produce potable water to be used as such. The term
does not include a borehole drilled or being drilled for the
20090HB1155PN1369 - 3 -
purpose of or to be used for systems of monitoring, producing or
extracting gas from solid waste disposal facilities, as long as
the wells are subject to the act of July 7, 1980 (P.L.380,
No.97), known as the Solid Waste Management Act, and do not
penetrate a workable coal seam. The term also does not include a
borehole drilled or being drilled for the purpose of or to be
used for degasifying coal seams if the following conditions are
satisfied:
(1) The borehole is used to vent methane to the outside
atmosphere from an operating coal mine.
(2) The borehole is regulated as part of the mining
permit pursuant to the act of June 22, 1937 (P.L.1987,
No.394), known as The Clean Streams Law, and the act of May
31, 1945 (P.L.1198, No.418), known as the Surface Mining
Conservation and Reclamation Act.
(3) The borehole is drilled by the operator of the
operating coal mine for the purpose of increased safety.
(4) The borehole is used to vent methane to the outside
atmosphere pursuant to a federally funded or State-funded
abandoned mine reclamation project.
"Well operator" or "operator." The person designated as the
well operator or operator on the permit application or well
registration. Where a permit or registration was not issued, the
term shall mean any person who owns, manages, leases, controls
or possesses any well or coal property, or any person who
locates, drills, operates, alters or plugs any well or
reconditions any well with the purpose of production from the
well.
Section 3. Duties of operators.
(a) Nonlease extraction agreements.--Except to the extent
20090HB1155PN1369 - 4 -
otherwise provided in a surface use and compensation agreement
duly executed by a surface owner and an operator, where oil or
gas are not leased for extraction from the surface owner by the
operator in a lease paying at least a one-eighth royalty to the
surface owner, an operator shall:
(1) Compensate fully the surface owner for damages
resulting in any diminution in value of the real property and
any real estate upon the tract, including, but not limited
to:
(i) Lost agricultural production and income.
(ii) Lost timber production.
(iii) Lost land value.
(iv) Lost use of and access to the surface owner's
land or water sources.
(v) Lost value of property improvements caused by
operations.
(2) Reclaim entirely the surface affected by oil or gas
operations within nine months of the cessation of extracting
oil or gas from any well on a surface owner's tract of land.
(b) Compensation.--An operator shall not be responsible for
negotiating or allocating compensation between the surface owner
and any tenant, except that an operator shall compensate fully
any tenant of the surface owner for any diminution in value of
leasehold improvements, made by said tenant, damaged as a result
of the operator's oil or gas operations.
Section 4. Notice of operations and surface use and
compensation agreement.
(a) Prior to entry.--No less than 15 business days prior to
initial entry upon a tract of land for activities that will not
disturb the surface, including inspections, staking, surveys,
20090HB1155PN1369 - 5 -
measurements and general evaluations of proposed routes and
sites for oil or gas operations, an operator shall provide
notice by certified mail to the surface owner of each tract on
which the operator proposes activity as well as a statement
citing deeds, leases, rights-of-way, easements and other rights
relating to the right of access of the operator to the tract of
land.
(b) Prior to application.--Prior to submission of an
application for a permit to the department under section 201 of
the act of December 19, 1984 (P.L.1140, No.223), known as the
Oil and Gas Act, and no less than 45 days before entering the
surface of the land to conduct any oil or gas operations, an
operator shall, by certified mail, provide the surface owner
with notice of the planned operations. Copies of the notice
shall also be sent to surface owners within a one-half mile
radius of each proposed well site. The notice shall include:
(1) Sufficient disclosure of the planned operations,
including topographical and underground maps of the relevant
areas, permits and materials submitted by the operator to
obtain permits to enable the surface owner to evaluate the
effects the operations might have on the lands of the surface
owner.
(2) A copy of this act and a copy of the Oil and Gas
Act.
(3) The name, address, telephone number and, if
available, facsimile number and electronic mail address of
the operator and the authorized representative of the
operator.
(4) Information regarding required or recommended
predrilling surveys and other provisions relating to:
20090HB1155PN1369 - 6 -
(i) Protection of water sources.
(ii) Well location restrictions.
(iii) Casing, cementing and plugging plans for wells
and production-related horizontal boreholes under the Oil
and Gas Act.
(5) A proposed surface use and compensation agreement
addressing, to the extent known, the following:
(i) Placement, specifications, maintenance and
design of well pads, gathering pipelines, water
pipelines, storage facilities for water, oil or gas,
compressor stations, pump stations, meter pits and roads
to be constructed and other facilities of every type to
be constructed and utilized either temporarily or
permanently for operations.
(ii) The proposed frequency of ingress and egress
across or under the surface of the land for operations,
including pipelines, and the routes for the same.
(iii) Construction, maintenance and placement of
pits used or planned for operations.
(iv) Use and impoundment of water on the surface of
the land.
(v) Removal and restoration of the species of plant
life existing prior to commencement of any operations on
areas to be impacted by those operations.
(vi) Surface water drainage changes.
(vii) Plans and actions to limit and effectively
control precipitation runoff, sedimentation and erosion.
(viii) Control and management of noise, weeds, dust,
traffic, trespass, litter and other interferences with
the use and enjoyment of the surface by the surface owner
20090HB1155PN1369 - 7 -
or tenant.
(ix) Interim and final proposals to reclaim the
surface.
(x) Plans or actions to be undertaken to minimize
damages to the surface.
(xi) Operator indemnification for injury to persons
or properties other than that of the surface owner when
caused by the operations.
(xii) Efforts to restrict access to the land of the
surface owner by third parties utilizing the access roads
and rights-of-way of the operator.
(xiii) An offer of compensation for damages to the
surface affected by operations.
(6) A plat that shows:
(i) The tract of land upon which each well is to be
located.
(ii) The name of the surface landowner of record and
lessor, if any.
(iii) The name of all surface landowners or water
purveyors whose water supplies are within one-half mile
of the proposed well location.
(iv) The location of water sources.
(v) Placement of well pads, gathering pipelines,
water pipelines, storage facilities for oil, gas or
water, compressor stations, meter pits and pump stations
and roads to be constructed for oil and gas operations.
(vi) Placement of pits and equipment used or
planned, and use and impoundment of water on the surface
of the land.
(vii) The workable coal seams, if any, underlying
20090HB1155PN1369 - 8 -
the tract of land upon which the well is to be drilled or
altered, which are to be cased off in accordance with
section 207 of the Oil and Gas Act.
(viii) The name of the owner of record or operator
of known underlying workable coal seams, if any.
(ix) The acreage in the tract to be drilled.
(x) The proposed location of each well determined by
survey.
(xi) The courses and distances of the proposed well
locations from two or more permanent identifiable points
or landmarks on the tract boundary corners.
(xii) The proposed angle and direction of a well, if
the well is to be deviated substantially from the
vertical course.
(xiii) The number or other identification to be
given to the wells.
(c) Persons to be notified.--The notices required under this
section shall be sent to the surface owner at the address shown
by the property tax records at the time the notice is given. If
the property tax records for the county or the records in the
recorder's office for the county where the property is located
disclose that legal and equitable title of the land are not held
by the same person, notice shall be given to both the holder of
the legal title and to the holder of the equitable title at the
addresses shown by the property tax records at the time the
notice is given.
(d) Surface owner options.--Upon receipt of the notice
required under subsection (b), the surface owner may:
(1) agree to the proposed surface use and compensation
agreement within 45 days of receipt; or
20090HB1155PN1369 - 9 -
(2) reject the proposed surface use and compensation
agreement and enter into a mutually acceptable surface use
and compensation agreement that sets forth the rights and
obligations of the parties.
(e) Presumption of receipt.--Notices to the surface owners
required under this act shall be deemed to have been received 15
days after mailing by certified mail.
Section 5. Entry without surface use and compensation
agreement.
(a) Requirements.--If, after 45 days from the date on which
a surface owner receives notice under section 4(b), no surface
use and compensation agreement has been executed by the operator
and surface owner, the operator may file applications for
permits with the department for the oil or gas wells proposed to
be located on the surface owner's property after depositing a
surety bond, letter of credit from a banking institution, cash
or certificate of deposit with a Pennsylvania surety company or
financial institution for the benefit of a surface owner in an
amount equal to the greater of:
(1) 120% of the operator's best compensation offer as to
each oil or gas production facility's location; or
(2) $250,000 per production facility location.
(b) Release.--The surety bond, letter of credit, cash or
certificate of deposit shall only be released by the surety
company or financial institution back to the operator if:
(1) the surface owner provides an affidavit that
compensation for use of and damages to the surface owner's
land have been paid in full to the surface owner;
(2) the surface owner and the operator have executed a
surface use and compensation agreement or otherwise agreed
20090HB1155PN1369 - 10 -
the surety should be released;
(3) there has been a final resolution of the judicial
appeal in any action for damages brought by the surface owner
and any awarded damages have been paid; or
(4) all wells on the land of the surface owner have been
plugged and abandoned in accordance with law and the operator
has not conducted oil or gas operations on the property of
the surface owner for a period of four years.
Section 6. Restriction on issuance of permits for wells.
The department shall not issue new permits or renew existing
permits for wells where an operator is not complying with the
terms of this act. The department may resume issuing permits to
the operator only when the operator demonstrates to the
department it is in compliance with this act.
Section 7. Attorney fees and costs.
(a) General rule.--In an action brought under this act, if a
court finds that compensation is owed under section 3, the court
may also award the prevailing party attorney fees and costs if:
(1) the operator conducted operations without providing
notice as required under section 4(b);
(2) the operator conducted operations without a surface
use and compensation agreement and before either depositing
or maintaining a bond or other surety as required under
section 5;
(3) the operator conducted operations outside the scope
of a surface use and compensation agreement and, when
entering into the agreement, knew or should have known that
operations would be conducted outside the scope of the
agreement; or
(4) the surface owner failed to exercise good faith in
20090HB1155PN1369 - 11 -
complying with the provisions of this act or the terms of a
surface use and compensation agreement.
(b) Clear and convincing evidence standard.--In an action
brought under this act, if a court finds that compensation is
owed under section 3, the court may also award the prevailing
party attorney fees, costs and treble damages if the court
finds, by clear and convincing evidence, that:
(1) the operator willfully and knowingly entered upon
the premises for the purpose of commencing the drilling of a
well:
(i) without giving notice as required under section
4(b); or
(ii) without a surface use and compensation
agreement with the surface owner and before depositing a
bond or other surety under section 5; or
(2) either the surface owner or the operator willfully
and knowingly violated the terms of a surface use and
compensation agreement between them.
Section 8. Protection of water supplies.
(a) Restoration and replacement.--A well operator who
affects a public or private water supply by pollution or
diminution shall restore or replace the affected supply with an
alternate source of water adequate in quantity and quality for
the purposes served by the supply.
(b) Investigation requests.--A landowner or water purveyor
suffering pollution or diminution of a water supply as a result
of the drilling, alteration or operation of an oil or gas well
may so notify the department and request that an investigation
be conducted. Within ten days of the notification, the
department shall investigate the claim and shall, within 45 days
20090HB1155PN1369 - 12 -
following notification, make a determination. If the department
finds that the pollution or diminution was caused by the
drilling, alteration or operation activities, or if the
department presumes the well operator responsible for pollution
under subsection (c), then the department shall issue orders to
the well operator necessary to assure compliance with subsection
(a). The orders may include orders requiring the temporary
replacement of a water supply where it is determined that the
pollution or diminution may be of limited duration.
(c) Presumption.--Unless rebutted by one of the five
defenses established under subsection (d), it shall be presumed
that a well operator is responsible for the pollution of a water
supply that is within 2,500 feet of the oil or gas well, where
the pollution occurred within six months after the completion of
drilling or alteration of the well.
(d) Defenses.--In order to rebut the presumption of
liability established under subsection (c), the well operator
must affirmatively prove one of the following five defenses:
(1) The pollution existed prior to the drilling or
alteration activity as determined by a predrilling or
prealteration survey.
(2) The landowner or water purveyor refused to allow the
operator access to conduct a predrilling or prealteration
survey.
(3) The water supply is not within 2,500 feet of the
well.
(4) The pollution occurred more than six months after
completion of drilling or alteration activities.
(5) The pollution occurred as the result of some cause
other than the drilling or alteration activity.
20090HB1155PN1369 - 13 -
(e) Preservation of defenses.--Any operator electing to
preserve its defenses under subsection (d)(1) or (2) shall
retain the services of an independent certified laboratory to
conduct the predrilling or prealteration survey of water
supplies. A copy of the results of the survey shall be submitted
to the department and the landowner or water purveyor in a
manner prescribed by the department.
Section 9. Remedies not exclusive.
The remedies provided by this act are not exclusive and do
not preclude a person from utilizing any other remedies allowed
by statute, common law, deed or contract.
Section 10. Emergency situations.
Notwithstanding any provision of this act to the contrary, no
notice, surface use and compensation agreement or bond shall be
required in emergency situations for activities determined by
the department to be necessary to protect public health and
safety or the environment.
Section 20. Effective date.
This act shall take effect in 120 days.
20090HB1155PN1369 - 14 -